Canada’s resource-heavy main index dropped on Thursday, dragged by energy and mining stocks, while rate-sensitive technology stocks fell amid interest rate hikes by major central banks.
At 9:54 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 138.86 points, or 0.7%, at 19,567.09, after touching a three-week low.
Energy and materials dropped 2% and 0.9%, respectively, as prices of crude oil and precious metals declined.
The technology sector lost 1.4%, pressured by a rise in yields on the benchmark 10-year Canadian bond and the U.S. 10-year Treasury note.
“It looks like it’s (global monetary policy tightening) going to continue for longer until we see economies slow or inflation go down more… even the central banks that had paused, like Canada and Australia, have gone back to raising rates,” said Colin Cieszynski, chief market strategist at SIA Wealth Management.
The Bank of England, Norway central bank and the Swiss National Bank have all raised interest rates on Thursday, adding to worries of prolonged tightening in monetary policy across major economies.
All eyes were on the second day of U.S. Federal Reserve Chair Jerome Powell’s congressional testimony after he hinted at the likelihood of further interest rate hikes on Wednesday.
According to analysts, minutes from the Bank of Canada’s policy meetings, released on Wednesday, made it clear that it was likely to raise rates again next month as economic data showed growth and inflation were stronger than expected.
Empire Co gained 3.3% to the top of the benchmark TSX after the food retailer posted a better-than-expected quarterly profit.
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